SkyTeam Captures Aerolineas Argentinas

Aerolineas Argentinas this week announced that it set to formally join SkyTeam during 2012, becoming the first South American member of the SkyTeam alliance. The Hub takes a look at why Aerolineas is an attractive option for SkyTeam.

SkyTeam's aim to be a global network alliance moved a step closer this week with introduction of Aerolineas Argentinas. With the KLM-Air France partnership in Europe, Korean Air and China Southern in Asia and Delta Air Lines in North America, the proposed integration of the national airline of Argentina gives SkyTeam its first based carrier in South America, although Aeromexico does give it presence in Latin America.

THE IMPORTANCE OF AEROLINEAS TO SKYTEAM

In a market of over 125 million annual passengers (IATA BSP data) Aerolineas is the fifth largest carrier in terms of passengers carried in the South American market as the table below illustrates.

Source IATA BSP data (Airport IS) July 2009-July 2010

With Star Alliance member TAM, the largest operator in Latin America and oneworld member, LAN, the third largest, the need for SkyTeam to gain a foothold in a continent with huge potential for growth is an important strategical move.

As Star Alliance and oneworld seem set to battle it out for control of the combined entity of LAN and TAM next year, the addition of Aerolineas Argentinas comes at a perfect time for SkyTeam.

There is no doubt that the grab for Latin American partners is on and the choice of Aerolineas shows that in some respects there is limited choice available to the alliances. The consolidation of the Latin American pool of carriers has probably forced SkyTeam to make a decision on a Latin American carrier sooner rather than later.

With Aerolineas undergoing a fleet renewal programme for its narrow and widebodied aircraft, the airline has an ambitious expansion plan to see the carrier grow its international network. Its addition to a major global network will only serve to help these plans.

THE AEROLINEAS NETWORK

Aerolineas currently has a 63% share of the domestic Argentinian network in terms of scheduled flights, only LAN Argentina and Sol Linhas Aereas offer any other significant network. Argentina has the third largest GDP in South America, behind Brazil and Venezuela and a population of 40 million with almost half of this population living in the province of Buenos Aires.

SkyTeam will now have access to the third largest economy in South America, an economy with scope to grow and also has access to the Buenos Aires market which is the key market in Argentina. Despite the fact that Aerolineas has been under constant restructuring, it sits in a market that is growing and therefore strategically important to SkyTeam

Aerolineas has its two largest operations located at the two major airports in Buenos Aires. It operates 541 weekly flights from Aeroparque Jorge Newberry(AEP). From AEP it operates mainly domestic flights, however it does offer narrowbody services to the near international markets of Asuncion, Florianopolis, Rio de Janeiro, Sao Paulo, Montevideo, Santiago and Salvador, Brazil.

Buenos Aires, Ezeiza International Airport, is home to Aerolineas Argentinas widebody network as well as some narrowbody services. Aerolineas currently operates the following international network from Ezeiza International Airport.

Source: Flightbase 14-20 November 2010

The carrier will bring connecting potential within the Southern Cone but does not have a major network. SkyTeam will gain a presence in Argentina, Chile, Uruguay and a greater presence in the main Brazilian centres. Aerolineas does fit into the SkyTeam strategy of integrating discrete new markets to the alliance rather than vast overlapping networks with the likes of Tarom, Vietnam Airlines, China Airlines and Aerolineas fitting into this strategy.